With many of us gathering on the
fourth of this month to
celebrate the birth of our country, it's a good time to assess the state of
U.S. pharma and biotech markets.

As you will read in this issue's Government
Watch section, federal and state officials are taking a keen interest in
American pharma
activities, from safe laboratory practices to industry-academic
relationships to funding for start-up companies. Some of this scrutiny will
bring about
welcome change and give the industry the resources it needs to stay
competitive; however, American pharmas are currently challenged on many other
fronts.

Patent expiration, sluggish pipelines and mounting job
losses have for some time been a
concern, but other forces are threatening Big
Pharma's bottom line. One major criticism is that innovation in the industry
has become idle—and some of
that criticism is coming from the industry itself.

Last month, Dr. John C. Lechleiter, president and CEO
of Eli
Lilly & Co., addressed the Detroit Economic Club and warned that America's
greatest competitive advantage—its
"genius for innovation"—is in jeopardy.
Lechleiter cited a 2009 study by the Information Technology and Innovation
Foundation which ranked the United States sixth among the top 40 industrialized
nations in innovative competitiveness, but 40th of 40 in measures of what
industrialized countries are doing to become more innovative in the future.
But
Lechleiter also suggested that with the right choices—such as improving math
and science education, changing to immigration laws to allow top
scientists
abroad to bring their talents here and funding and tax breaks for research
institutions—"what might seem unimaginable today will be
commonplace tomorrow."

The rapid growth of the CRO market also has some worried
that Big Pharma
will outsource much-needed jobs and services to firms in
foreign countries. Dr. Mark Fishman, president of Cambridge, Mass.-based
Novartis Institutes for Biomedical Research (NIBR), the global
pharmaceutical
research organization of Novartis, recently told
the Life Science Leader that "there is no
question that the economic
downturn has affected the scientific enterprise in the United States, and I
worry that this may be a problem for future
generations of American
scientists." However, Fishman added that he still believes the United States
has "the strongest system of government support
for scientific and biomedical
research as compared with any other country in the world."

"I am
not sure I agree that there is less scientific talent
in the United States than there has been in the past," Fishman told the
magazine. "While job
opportunities for American scientists may be fewer than in
the past, I believe that these trajectories are self-correcting, and the
situation will
likely be different in the not-too-distant future."

Due to these various challenges, analysts have noted
that
pharma has fallen out of favor with Wall Street and now has one of the lowest
price/earnings ratios of any major sector of the stock market. But
Barron's Andrew Bary remains optimistic,
writing that when
Wall Street writes off one of the world's most important industries, and with
valuations at all-time lows, investors ought to take
notice. According to Bary,
investors should consider that the top companies are cutting costs, merging,
entering into partnerships and expanding into
the OTC and developing world
markets. They're also spending billions on research and development, which
could pay off handsomely, Bary adds.

So with every criticism come suggestions for how to overcome
these challenges and hope for pharma's
future. Big Pharma, like any other
American industry, has its ups and downs, but is marked by the ability to
rebound from any adversity. Simply put,
it's the American way.